Cryptocurrency-Friendly Legislation in Japan, South Korea and Malta

Japan

The Financial Services Agency of Japan is considering a revision of its law governing cryptocurrency exchanges, according to local news source Sankei.

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The regulator wants to extend an existing law, the Financial Instruments and Exchange Act, to cover these businesses. According to the report, it was decided that the current legislation does not sufficiently protect customer money in the event of a business collapsing.

The FIEA, amongst other things, requires businesses to store and manage customer money separately from corporate assets. If cryptocurrency exchanges are made to conform to laws governing securities, cryptocurrency will be treated as any other financial product and customers will gain the usual protection.

Japan has recognised Bitcoin as legal tender since the passing of the Virtual Currency Act in April of 2017. The law required cryptocurrency exchanges to get FSA licences – in September, eleven were awarded. Thus Japan has gained a reputation of being quite forward-thinking in this regard, and reportedly, approximately 3.5 million people in the country hold at least one cryptocurrency.

However it has had problems – most notably when hundred of millions of dollars’ worth of cryptocurrency was stolen from a popular exchange. In response, the FSA began cracking down on the sector, carrying out inspections, handing out warning notices, and forbidding the sale of anonymous coins like Monero and Dash.

South Korea

The South Korean government has announced a new classification system for cryptocurrency-related businesses, according to local news source thebchain.co.kr. This marks the first time that the government has accepted the industry as a legitimate business concern.

🇰🇷 – https://t.co/ZamFbyUjbB

The Korean govt. is implementing an industrial classification system for blockchain. This shows that the govt. now acknowledges crypto exchanges as real business entities. Remember my post yesterday about the FEIA in 🇯🇵? Same deal. Called it. ✅

— Korean Cryptocurrency & Blockchain News (@BlockchainROK) July 5, 2018

Under the new system, the blockchain industry will be divided into three sections, and subdivided into a further ten.

The three sections are (translated from Korean):

1. ‘Software development and supply business’
2. ‘Computer programming, system integration and management’
3. ‘Blockchain technology-related hosting service industry’

The first section includes gaming decentralised application platforms like Ethereum (‘blockchain-based system software development and supply businesses’), the second includes mining-related activities (‘other information technology and computer operation service industry related to block chain technology’), and the third includes cryptocurrency exchanges (‘encryption asset brokerage and brokerages’).

The decision was reached after consulting with 160 different institutions, including government ministries, regional municipalities, financial institutions and corporations, according to the report. The final draft is expected to be released at the end of July.

Background

Cryptocurrency is very popular in South Korea, and South Korean exchanges were amongst the biggest in the world. However the industry has suffered somewhat from a suspicious government. ICOs were made illegal in September 2017, and it allowed exchanges to operate only under strict conditions.

This development indicates a change in attitude on the part of the government.

Malta

The Prime Minister of Malta, Joseph Muscat, wrote a Twitter message confirming the passage of legislation designed to attract blockchain businesses.

#Malta 🇲🇹 officially the first country worldwide to have holistic legislative framework regulating #blockchain & #DLT technologies. We will be the #global hub for market leaders in this new sector. Now for the implementation of #BlockchainIsland -JM @SilvioSchembri

— Joseph Muscat (@JosephMuscat_JM) July 4, 2018

Specifically, the legislation takes the form of three new bills that were originally published in late May. One concerns initial coin offerings, one conerns the development of an industry-specific governing body, and the third is a more general law that defines “designated innovative technology arrangements.”

Today the laws had their final reading in the Maltese Parliamen, and passed into law unanimously.

Muscat said to CCN: “This is the last stage of the legislation that will put Malta on the international map for blockchain and crypto regulation. There is political consensus on this roadmap and we are foreseeing that this area will be the mainstay of our economic growth for the next 4-5 years”.

Malta has already succeeded in attracting the two biggest cryptocurrency exchanges in the world to its shores, which means that more cryptocurrency trading passes through the Mediterranean island than anywhere else in the world.